Startups Begin ‘About Face’ RE: Facebook

Startups have to learn to walk before running toward success. Take a quick perusal of the Web; you’ll find an endless supply of tips and suggestions about Facebook, enough to make Mark Zuckerberg blush. However, sometimes it’s popular to go against the grain. Afterall, is Facebook such a great investment of time and money? Some startups may not think so.

The WSJ followed the ambiance of the South by Southwest conference, telling of a sense of fear emanating from startups in regard to Facebook allegiance. Some are viewing a to-be-two-faced Facebook, a before and after IPO social media giant. Facebook has gained the fan favor of 845 million users as well as rubbed mutually-benefitting elbows with such companies as Zynga. However, is Facebook’s days of popularity numbered (with IPO-related dollars and cents)?

Let’s consider the anxieties of another company, Math Camp, a service allowing its users to sign in with Facebook accounts. Math Camp garners statistical data from the union; but, executives worry such data will soon come at a cost. Joining forces with Facebook makes sense. Just about (any) target market is represented there. However, considering the incipient IPO, should potential partners consider an about face?

“Twelve months ago, every entrepreneur would have said, ‘I’m going to build my company around Facebook’s platform,'” states one conference attendant. “Now, every entrepreneur says I’m going to build my product, and Facebook will [only] be a key component.”

Is Facebook going to become somewhat of a quiet spider, inviting brands into its web and then ensnaring victims with fees for continued leverage? The WSJ report reflects more than seven million applications affiliated with the social media platform. Zynga pays Facebook 30% of (the former’s) its revenue. Zynga participation represents 12% or $3.7 billion of Facebook’s revenue (2011 statistics).

However, not all startups rely so heavily on Mark Zuckerberg’s brainchild. At present, Pinterest (tired of hearing about them yet?) uses Facebook to incur traffic but does not pay for such luxuries. Actually, Pinterest’s CEO, Ben Silbermann, insinuated his site may emulate Facebook (rather than rely on it), modifying Pinterest to be a platform for other brands to ‘use’ (at cost?).

Only time will tell how Zuckerberg and crew will handle the IPO as well as its friendships with brands, which fall along the spectrum of highly-to-loosely dependent on the social giant. What are your thoughts? Can you recall any similar dynamics in recent history?

5 thoughts on “Startups Begin ‘About Face’ RE: Facebook”

Good thoughts, Todd. Phew, being an online business these days warrants your own brand of Robert Duvall methinks, a counselor. We’re reaching a tipping point; all of this money-making first, good-business second, is going to come to a halt. At present, online business seems like a game of money-making chess, with end users being at the bottom of the C-note(m) pole, though ironically the ones fueling the business-world go-round. Brands with traditional views of customer service and providing value will survive the digital age IMO. From a consumer’s perspective, it almost seems like online strategies are about which brands are ‘winning’ some elitist, capitalistic game rather than offering something of value. I get, and in many ways support, capitalism; but I can’t ignore the ‘online elephant’ either.

I don’t think you can build your startup solely on facebook. But it also depends on what you build. I think it’s a key component you have to be out there where your market is. With 845 million users you can probably find your market somewhere. You have to be able to communicate with them. I think the startups that aren’t using FB are really missing out on a great way to spread the word about their business.

We’re reaching a tipping point; all of this money-making first, good-business second, is going to come to a halt. At present, online business seems like a game of money-making chess, with end users being at the bottom of the C-note(m) pole, though ironically the ones fueling the business-world go-round. Brands with traditional views of customer service and providing value will survive the digital age IMO.

Facebook is definitely a great way to spread a word and increasing traffic, and yes, I agree with Eric, startups should use FB. But building a company around Facebook’s platform, no I don’t think a company should rely so much. It was a different story then and it is totally different now.